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IP Alert: Federal Circuit Affirms Refusal to Admit Source Code Printouts Obtained from Third Parties

April 12, 2021

The Federal Circuit’s recent decision in Wi-LAN Inc. v. Sharp Electronics Corp. demonstrates potential difficulties for plaintiffs in proving infringement where third-party information is necessary to establish that defendants practice the asserted claims. The court affirmed the district court’s grant of summary judgment of noninfringement, holding that purported printouts of source code and supporting declarations obtained from third-party chip manufacturers were inadmissible hearsay.

Although the court does not explicitly identify what type of information regarding the source code would have been admissible, it identified several problems with the specific printouts presented by Wi-LAN that prevented them from falling within exceptions to the hearsay rule.

The accused devices sold by the defendants were smart televisions that incorporated chips that allegedly perform patented methods of “deinterlacing” older video formats so that the video displays correctly on modern televisions. The district court granted summary judgment in favor of the defendants, holding that Wi-LAN lacked sufficient admissible evidence to prove direct infringement. Wi-LAN relied on source code evidence to oppose summary judgment, consisting of printouts of source code with added commentary. Wi-LAN also relied on declarations from third-party manufacturers stating that the source code printouts related to deinterlacing processes in a specified list of chips and that there were no material differences between the produced printouts and other versions of code made since 2009. These source code printouts and declarations were obtained by Wi-LAN after filing lawsuits against the third-party chip manufacturers.

On appeal, the Federal Circuit affirmed, rejecting Wi-LAN’s various theories of admissibility. First, Wi-LAN argued that the source code printouts fall under the business records exception to the hearsay rule under FRE 803(6), which requires the records to have been kept in the course of a regularly conducted business activity and certified by the custodian or another qualified witness. The court held that the declarations proffered could not qualify as certification by a custodian. While the court acknowledged that declarations may be used at summary judgment if the witness will be available to testify at trial, it pointed out that Wi-LAN had obtained the information through lawsuits filed against third parties and had admitted that it would likely not be able to compel attendance of the declarants at trial. The court also rejected Wi-LAN’s argument that the declarations themselves were admissible under the business records exception, because the declarations resulted from litigation filed against the chip manufacturers, not regular business activities.

The business records exception further requires that the opponent does not show that the source of information or the method or circumstance of preparation indicate a lack of trustworthiness. The court pointed out that the defendants had demonstrated a lack of trustworthiness of the printouts, pointing to inconsistent dates in metadata and revision histories, as well as added commentary on the printed source code excerpts. The court also noted that the district court had found that Wi-LAN had failed to obtain change logs, file comparisons, or other evidence that could clear up these inconsistencies.

The court also held that the district court did not abuse its discretion in finding that the circumstances under which the printouts were produced were “highly dubious” and that the printouts lacked indicia of trustworthiness, thus refusing to find the records admissible under Federal Rule of Evidence (FRE) 901(b)(4).

Finally, the court rejected Wi-LAN’s argument that the printouts should have been admitted into evidence under FRE 703 because they were relied on by Wi-LAN’s expert. First, the court pointed out that expert reliance does not translate to admissibility. Second, the court held that Wi-LAN’s expert testimony was not itself admissible to establish infringement because Wi-LAN did not establish that experts in the field reasonably rely on unauthenticated source code. The court agreed with the district court that such a use of expert testimony would merely serve as a back door to allow admission of otherwise inadmissible evidence.

The Federal Circuit also affirmed denial of Wi-LAN’s fallback request for additional time to obtain admissible versions of the source code, noting that Wi-LAN had been on notice that it was going to need the third-party source code and during discovery had repeatedly requested extensions of time to obtain the code.

This case illustrates some of the challenges that a plaintiff may face in obtaining admissible evidence of infringement where third parties are involved. Plaintiffs should investigate these issues early in a case and attempt to understand potential opposition to admissibility that may be raised by defendants. If custodians of third-party records will not be able to be presented as live witnesses at trial, their written declarations should be presented early enough during discovery for the defendants to have an opportunity to challenge them, so that any additional evidence that is necessary may be gathered prior to the summary judgment stage. Plaintiffs should also consider deposing custodians of source code or other key third-party documents, providing the opposing party an opportunity to cross-examine those witnesses and creating sworn testimony that may be used in court should the custodians be unavailable.

For more information on this case, please contact Fitch Even partner Mark A. Borsos, author of this alert.

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